Outside the theatre in Tiraspol, where a bride in a long white frilly dress was posing for photographs, a billboard hung bearing the pictures of a trio of large sturdy men: the leaders of Abkhazia and South Ossetia, Sergei Bagapsh and Eduard Kokoity, and Transdniestria's leader, Igor Smirnov.

Thomas de Waal is Caucasus editor at the Institute for War and Peace Reporting in London. He is co-author of Chechnya: calamity in the Caucasus (New York University Press, 1998) and author of Black Garden: Armenia and Azerbaijan through peace and war (New York University Press, 2003)

Musa Shanib in the Caucasus: a political odyssey" (11 October 2005)

" Abkhazia's dream of freedom" (9 May 2006)

" The Russia-Georgia tinderbox" (16 May 2008)

"T he north Caucasus: politics or war?" (7 September 2004)

" Abkhazia-Georgia, Kosovo-Serbia: parallel worlds?" (1 August 2006) - an exchange with Zeyno Baran

" Abkhazia's archive: fire of war, ashes of history" (20 October 2006)

" South Ossetia: war and politics" (10 August 2008)

"South Ossetia: the avoidable tragedy" (12 August 2008)

Until recently this group portrait was a trinity of the unrecognised. The three separatist republics which had broken away from Georgia and Moldova in the early 1990s, provided a mutual-support group of would-be states without international recognition. Their main succour came from parliamentarians in Russia's state Duma, who grouped the three territories together in ever more strident resolutions on the unresolved conflicts of the former Soviet space.

That all changed on 26 August 2008, the day Moscow suddenly followed the Duma's lead and unilaterally recognised the independence of Abkhazia and South Ossetia. On Russian-backed Trandsniestria (Transniestria is the preferred spelling of the region itself), which declared its independence from Moldova in 1990 there was silence - while on the other separatist dispute in the south Caucasus, the Armenian-Azerbaijan conflict over Nagorno-Karabakh, Russia chose another tack, presenting itself as the indispensable and neutral broker.

I came to Chisinau, capital of Moldova, and Tiraspol, capital of breakaway Transdniestria, as the guest of the Organisation for Security and Cooperation in Europe (OSCE) to deliver a lecture on journalism and conflict in both cities. I have spent the last fifteen years studying four separatist conflict-zones in the Caucasus (beginning with Chechnya) but had never managed to visit this one.

As soon as I arrived, I realised that, despite superficial Caucasian similarities, I had to cast off preconceptions here. The process began with the very question of whether "conflict" was even the right term to describe this dispute. "Quarrel" might be a better definition to suggest the nuances of a situation where, as I learned, some people work during the week in Chisinau and go home for the weekend in Tiraspol; where the Tiraspol football team Sheriff is top of the Moldovan league and has such a shiny big stadium that the Moldovan national team has used it for international fixtures; where a chain of pizza restaurants named Andy's Pizzas, rumoured to be owned by a relative of a senior member of the Moldovan government (not called Andy but I cannot say more) has branches on both sides of the Dniestr river.

The dispute here, then, about life-and-death issues, but about power, culture and resources. It has all the uneasy resentments and intimacy of (that word again) a family quarrel (see "Another forgotten conflict", Economist, 13 November 2008). As in the Caucasus, there was a clash between resurgent nationalism from the new emergent state in Moldova and a community that felt alienated by the new nationalists and tried to cling to rule from Moscow as long as possible. The first spark for trouble was the passing of a new language law in Moldova on 31 August 1989. It was also a clash between two competing elites, one predominantly industrial, the other rural (and between unequals: Moldova's population was then around 4.3 million, and Transdniestria's 550,000).

There were a few days of bloodshed in 1992, the Russian 14th army moved in to suppress the Moldovans, and since then Transdniestria has lived a twilight existence as a pro-Russian unrecognised enclave.

The measure of conflict

One lesson of the Caucasus is that words create deeds. The angry rhetoric from Georgians and Ossetians - accusing one other of being "criminals", "terrorists", perpetrators of horrific crimes - created a context in which war could break out between two communities who are capable of getting along perfectly well. Over Nagorno-Karabakh, some of the bellicose rhetoric on the Azerbaijani side has been so extreme in recent times that is no surprise to see large parts of the Azerbaijani population advocating a return to war.

I noticed none of that here. True, there is some verbal sniping, especially between the two leaders concerned, Moldova's Vladimir Voronin and Transdniestria's Igor Smirnov. Voronin, who comes from Transdniestria, tried to visit his home village on 3 November but was turned back. He described Smirnov as "an evil force who has turned his region into a festering wound on the body of Moldova." Yet, others describe how when the two sides meet at conferences or negotiations they sit down over a glass of cognac and get along famously.

Some international and local observers gave me mixed reviews of the Moldovan government's record on trying to solve the dispute. "Inconsistent" and "amateur" were two of the verdicts. But when I interviewed Vasily Sova, Moldova's friendly moustachioed "minister of reintegration" and chief negotiator, he put on an impressively reasonable performance.

Among openDemocracy's articles on Europe's "frozen conflicts":

Sabine Freizer, "Nagorno-Karabakh: between vote and reality" (14 December 2006)

Robert Parsons, "Georgia, Abkhazia, Russia: the war option" (13 May 2008)

Donald Rayfield, "The Georgia-Russia conflict: lost territory, found nation" (13 August 2008)

Neal Ascherson, "After the war: recognising reality in Abkhazia and Georgia" (15 August 2008)

George Hewitt, "Abkhazia and South Ossetia: heart of conflict, key to solution" (18 August 2008)

Mary Kaldor, "Sovereignty, status and the humanitarian perspective" (26 August 2008)

Fred Halliday, "Armenia's mixed messages" (15 October 2008)

William H Hill, "Russia's game with Moldova" (24 October 2008)

Donald Rayfield, "Georgia and Russia: the aftermath" (16 November 2008)

Plus: openDemocracy's Russia section reports, debates and blogs the Georgia war

What, I asked, was the main lesson for Moldova of the South Ossetia conflict. He answered: "We long ago learned the main lesson and we've stuck to it since 1993 and that is that you can't solve these problems by force, you have to do it peacefully."

The whole tenor of Sova's remarks was an implied rebuke to Georgia and its tactics of constantly raising the stakes with Russia. "Small countries ought not to create big problems, neither to themselves, nor to the big players", he said. And he valiantly declared that he was not envious of the mass international attention and multi-billion-dollar aid package being lavished on Georgia since the war. "Let us live in poverty but in a country at peace", said Sova.

Moldova has explicitly said it will not seek membership of Nato and wants to see the European Union as a more powerful player in the dispute. "We want to be an attractive bridge between Moscow and Brussels", said Sova - eloquently but rather optimistically given that Moldova is the poorest country in Europe.

Chisinau has also said it will respect Russian investments in Transdniestrian industry. That primarily means MMZ a big steel factory which is half-owned by Russian-Uzbek oligarch Alisher Usmanov. Moldova would stand to win much-needed economic dividends from a resolution of the dispute and the incorporation of Transdniestrian industry into its economy.

The unreal reality

Crossing to the other side of the river, I was confronted with the strange mixture of money and patriotism that fuels Transdniestria and makes it a sort of miniature if less threatening version of Vladimir Putin's Russia. Sheriff, the big conglomerate that owns the football team, has opened a couple of vast supermarkets. Inside, everything looked as it should, until I started studying the fruit and vegetables section. There were apples from Italy, pears from Spain, potatoes from Poland, a lot of produce from "PMR" (that is, Pridnestrovskaia Moldavskaia Respublica, or Pridnestrovie), Transdniestria in other words, but absolutely nothing from Moldova. Truly, this is an economic bubble.

There is a lot of money being made in Transdniestria, as I observed on the far side of the river. Near the football stadium, behind high walls stood a Hollywood-style mansion with Greek pilasters, reputedly belonging to one of the bosses of Sheriff.

In the city itself, socialism is the message. Inside the vast building of the supreme soviet (Transdniestria keeps its Lenin statue, its streets named after Rosa Luxemburg and Karl Marx) I was met by Sergei Cheban, head of the foreign-affairs committee of the local parliament.

Cheban also did his best to be reasonable. Of course, like any respectable secessionist he wanted to talk about Kosovo, Montenegro and East Timor and the numerous precedents his territory aspired to follow. But he conceded that a deal over sovereignty was quite possible: Transdniestria had been ready to sign up to plans for federation with Moldova, it was the Moldovans who had rejected it.

Did Transdniestria feel let down by Russian failure to recognise its independence when it granted this to Abkhazia and South Ossetia? Cheban put a brave face on it, pointing out that geography was not in the territory's favour - as Transdniestria is separated from Russia by a vast stretch of Ukraine. "We don't need that kind of recognition", he said.

Unrecognised entities have an unreal air about them. In part it is a matter of the "participant-observation" phenomenon, with the observer knowing that this place is not "for real" and therefore looking out for flaws in the picture. In an internationally unrecognised state after all the institutions are self-invented, all its standards judged by no one but itself. But it is also the case that that officials in Abkhazia or Nagorno-Karabakh or pre-war Chechnya over-compensate for their lack of legitimacy by an excess of symbols, including a profusion of flags, crests and slogans that insist on statehood rather too shrilly.

Here was no exception, although there was a Bolshevik tinge to the symbolism. There were the red-green-and-red flags of the PMR, the republic of Transdniestria. There was the self-styled currency, the Transdniestrian rouble, bearing portraits of Russian general Alexander Suvorov. There were revolutionary slogans, such as "liberty, equality, fraternity". The windows of the Proryv youth movement (founded on the model of Nashi in Russia) displayed posters not just of Vladimir Putin and Dmitry Medvedev but of Che Guevara, who I suspect would have despised the capitalist pretensions of the men he was sharing a window with.

Black market, black hole

Yet, the statelet is vulnerable on a couple of fronts. First, I was told that there are now more manifestations of discontent among ordinary people who had earlier been too afraid to protest. The perception is that Igor Smirnov and his team are enriching themselves without giving anything back. Recently, more than 100 staff at the radio-station were suspended on low pay after refusing to accept an order to have the ministry of information take over the station. But they kept on protesting, even inviting the information minister to the building to justify himself.

Second, the untaxed economy of Transdniestria is facing a slow squeeze. With more trade now going to the European Union than to Russia, almost 500 Trandniestrian companies have registered in Chisinau in order to do legitimate business with Europe.

The key is Ukraine. When I probed Cheban about Transdniestria's reputation as an economic black hole, he shot back: "If we have Moldova on one side and Ukraine on the other, how can we not be transparent exporting our goods?" Moldovans are certainly involved in exploiting Transdniestria's twilight status, but they are also poor and have political motives for not doing so. Ukraine, which is not so constrained, is the major co-conspirator in the black economy.

The attraction is obvious. Goods, whether they be chickens or cars, can be imported at nearby Odessa, Ukraine's main port, with a listed destination of Transdniestria - nominally a foreign country, and therefore exempt from customs duties. Once arrived in Tiraspol, a middleman is paid off and the goods exit Transdniestria again for Ukraine.

That is why, according to the European Union Border Assistance Mission for Moldova and Ukraine (Eubam), the people of Transdniestria supposedly consumed during a few months of 2006 were supposedly consuming 67 kilograms of chicken per head, while the more modest Germans were only eating 5 kg of chicken meat.

Eubam, created in 2005 and based in Odessa, is throwing a light on Transdniestria's illicit trade. It does not have the licence to intervene, only to assist Moldovan and Ukrainian customs-officers to do their job properly. In part it absolves the Transdniestrians from the more lurid accusations of gun-running and drug-smuggling.

But, as Andrew Filmer, deputy head of operations for Eubam in Odessa, told me: "A lot of illegal activity is still happening [in Transdniestria]." As he noted, it is legitimate small businesses that tend to suffer because of these large monopolistic scams.

A delicate dance

Negotiations over Transdniestria are at an impasse. The Russians have been trying to push their own initiative, said to be a revived version of the so-called "Kozak memorandum" of 2003 that Moldova rejected at the last minute. The Moldovans are cool - and, besides, Vladimir Voronin is stepping down from the presidency in spring 2009 and is losing the authority to negotiate a deal. Transdniestria and the Russians want the Russian troops - remnant of the 14th army - to stay; other parties say that would turn Transdniestria into "another Kaliningrad", or in other words an enclave of the Russian military in central Europe.

The result is a delicate diplomatic dance. Ukraine, politically divided and beholden to its own corrupt economic elites, has to decide how far it is prepared to push Transdniestria to clean itself up and risk the wrath of Moscow as a result. The Russians must decide how much it is in their interests to maintain an unrecognised pro-Russian enclave, which owes them more than $1.5 billion for an unpayable gas debt - or whether they prefer to promote a deal with Moldova and open up links with the European Union that way. The EU must decide how much of a priority this small obscure dispute is. Arguably, it should see an opportunity here to pursue an agreement that would open up a path to Europe for both Moldova and Transdniestria and make a model of successful cooperation with the Russians. That would suit everyone, except the black-marketeers.

Ultimately, it is up to the internationals only to underpin a deal the locals make themselves. Maybe I was not there long enough but I met no one who expressed raging hostility for the other side. Weary exasperation with the dispute seems to be the prevailing emotion. I was struck too by the comment of a Transdniestrian journalist who stepped over the issue of sovereignty and said, in a pithy rebuke to the corruption of both Moldova and Transdniestria: "I'd like to live in a country where everything is legal." Leaders, take note.